SINGAPORE, Sep 08 (Alliance News): Oil prices extended gains to multi-week highs on Tuesday as concerns over a prolonged Middle East conflict raised fears of supply disruptions, particularly after Iran threatened to retaliate against any new US attacks on its assets.
Brent crude futures rose $1.25, or 1.3%, to $98.25 a barrel by 0630 GMT, while US West Texas Intermediate (WTI) crude gained $2.22, or 2.4%, to $93.70 a barrel.
Brent earlier climbed to $98.79 a barrel, its highest level since July 24, while WTI reached $94.21, its highest since June 8.
Following the US Labor Day holiday on Monday, WTI was catching up with Brent, which had already reflected the escalation over the weekend, said Suvro Sarkar, head of energy research at DBS Bank.
Sarkar said the latest increase in hostilities between the United States and Iran could significantly alter market expectations about oil price risks through the rest of 2026 and into 2027.
Iran has threatened the United States with “economic warfare” and said it fired an advanced missile at US warships, while Iran-backed Houthis attacked several Saudi cities, wounding 73 people and forcing some energy facilities to halt operations.
US forces on Saturday struck three Iranian oil tankers, including one near Kharg Island, Iran’s main oil export hub, according to US Central Command. The attacks followed strikes by Iran’s Revolutionary Guards on US warships operating in the region.
Analysts warned that the escalation could keep Persian Gulf oil supplies constrained for an extended period.
“The recent escalation of the Middle East conflict has increased the likelihood of a prolonged standoff,” said Daniel Hynes, an analyst at ANZ. He said the situation could keep Gulf supply restricted through the end of 2026.
Hynes said a full return to pre-war oil throughput was not expected until late in the first quarter or early in the second quarter of 2027.
Shipping traffic through the Strait of Hormuz also slowed at the beginning of the week after Iran warned it would retaliate against any further US attacks.
The Strait of Hormuz is a key route for global energy shipments, making any prolonged disruption a major concern for oil markets.
Goldman Sachs raised its Brent and WTI price forecasts by $5 to $85 and $80 per barrel, respectively, for December 2026. For 2027, the bank raised its forecasts to $80 for Brent and $75 for WTI, reflecting its assumption that Middle East shipping disruptions could continue into next year.
Meanwhile, analyst Ed Meir at financial services platform Marex said crude prices were likely to remain elevated through the end of the year as long as the conflict continues.
Marex expects the war to continue because of the “multitude of issues that have yet to be addressed”, Meir said.
